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Hello sir,
Would really appreciate it if you help me clear my doubts about these questions.
When calculating cost of closing inventory, if you have direct materials and share of storage of finished goods – only direct material counts because share is not the full cost incurred correct?
When calculating balance of cash account, cash received from credit customers, I am getting confused if this goes in the cash account or trade receivables control account and why? I am thinking of trade receivables because it says credit customers and this goes on the credit side.
Thank you for your time.
The cost of closing inventory (assuming they produce their own goods) is all costs of production (including, obviously, the cost of materials). It does not include the cost of storing finished goods because this is not a cost of producing them. It will however include all other costs in the factory (such as labour and factory overheads).
All cash received appears in the cash account!!!! If it is cash received from credit customers then we debit cash and credit receivables.
It does seem as though you are not watching my free lectures, because both of these are explained in the lectures. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well 🙂
Thank you for your reply.
Yes you are right on these questions I asked I did not watch yet but will do tonight, don’t worry I want to pass as well, however, I did watch on the markups and consolidated and found them very well explained as I was getting questions wrong but now I feel confident on these, thank you.
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